House Democrats' HEA Reauthorization Bill's General Provisions and Miscellaneous Changes

Editor's Note: This article is the sixth and last in a series that delves into Title IV-related issues contained in the House Democrats' bill to reauthorize the Higher Education Act, the Aim Higher Act.

This article details proposed changes to the General Provisions and miscellaneous changes in the Aim Higher Act.

The Aim Higher Act (AHA) authorizes the America’s College Promise Federal-State Partnership, which would provide federal grants to states and Native American tribes to make community college free for eligible students. States and tribes would have to agree to waive community college resident tuition and fees for all eligible students in order to receive the grants. The federal share of these grants would be equal to the per-student amount needed to pay 75 percent of the average community college resident tuition and fees, or 95 percent in the case of tribes whose own community colleges serve more than 75 percent low-income students.

The bill also contains a provision within the America’s College Promise Partnership for historically black colleges and universities (HBCUs) and minority-serving institutions (MSIs) to cover tuition and fees for the first 60 credits students take at those institutions. HBCUs and MSIs that enroll a student body comprised of at least 35 percent low-income students could apply for grants under separate programs contained within the America’s College Promise Partnership to be used to waive or significantly reduce tuition and fees for a student’s first 60 credits at the institution. HCBU and MSI grants would not require a non-federal match.

The so-called "90/10" rule, which currently requires that proprietary institutions derive no more than 90 percent of their revenues from Title IV funds is amended under the AHA to include all sources of federal education assistance, including veteran education benefits, not only Title IV funds. The revenue cap would also be lowered to 85 percent.

The AHA creates a competency-based education (CBE) demonstration project that would allow up to 100 institutions, selected by the Department of Education (ED), to request a waiver of, or flexibility on, certain statutory and regulatory requirements in order for them to award Title IV aid under a CBE model.

Several changes are made to the cohort default rate (CDR) in the AHA. It adds an "adjusted cohort default rate," whose calculation would exclude students in non-mandatory forbearance for between 18 and 36 months from an institution’s number of borrowers who entered repayment. Borrowers in forbearance for longer than 36 months would be considered in default under the adjusted CDR, which would be calculated by taking the number of borrowers in default, divided by the total number of borrowers who entered repayment, times the percentage of the institution’s students who borrowed.

Institutions whose adjusted CDR fell below 5 percent would be permitted to disburse loans in a single installment for periods of enrollment not exceeding a semester, trimester, or quarter. Institutions would lose eligibility to participate in the Title IV aid programs for adjusted CDRs exceeding 20 percent for three consecutive years. Institutions would also lose eligibility to participate in the Title IV programs for adjusted CDRs exceeding 10 percent for eight consecutive years, if during those eight years the institution showed no improvement in meeting certain accrediting agency student achievement standards, including completion rates and workforce participation measures like job placement or licensure rates. Those institutions with adjusted CDRs of greater than 15 percent for six consecutive years would lose Pell Grant eligibility for new students and, if the institution showed no improvement in meeting certain student achievement standards within a two-year period, would also lose eligibility to award Title IV loans to new students. Certain exceptions would be permitted during the transition from CDR to adjusted CDR. The AHA adds a provision to the law that institutions may not, as part of a default management plan required under section 435(a)(7)(A)(i)(II), place students into forbearance in order to improve the institution’s cohort default rate.

The proposal also replaces program review priority assignment based on cohort default rate. Instead of assigning priority to institutions with cohort default rates over 25 percent, ED will prioritize those with adjusted cohort default rates over 18 percent, or those with rates that place them in the highest 25 percent of institutions.

The AHA also adds two new prohibitions on institutional practices. First, institutions could no longer deny a student’s access to transcripts because of federal loan default. Second, institutions would be banned from requiring students to agree to any time limits on when they could pursue legal claims against the institution.

Finally, the proposed legislation removes the student eligibility provision requiring registration with the Selective Service System.

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